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A Spatial Equilibrium Analysis of U.S.–Canadian Disputes on the World Softwood Lumber Market

Author

Listed:
  • Stephen Devadoss
  • Angel H. Aguiar
  • Steven R. Shook
  • Jim Araji

Abstract

This paper utilizes a world spatial equilibrium model to examine the effects of U.S.–Canadian softwood lumber disputes on U.S., Canadian, and other exporters' and importers' lumber markets. Results show that the U.S. import tariff on Canadian softwood lumber impacts prices, supply, demand and trade flows not only in the United States and Canada but also in the other countries. Though the goal of U.S. trade restriction is to limit imports from Canada and protect its producers, the United States cannot fully accomplish this goal as non‐Canadian exporters fill the void left by the reduced imports from Canada. Canadian producers lose from the U.S. policy, but their loss is mitigated as Canada redirects its exports to other importers. Importing countries such as Japan and the European Union benefit from the U.S. trade restrictions as Canada seeks to sell its softwood lumber to these countries. Dans le présent article, nous avons utilisé un modèle mondial d'équilibre spatial pour examiner les répercussions que le différend canado‐américain concernant le bois d'œuvre a sur le marché du bois de sciage des États‐Unis, du Canada et d'autres pays exportateurs et importateurs. Les résultats montrent que le tarif douanier des États‐Unis sur le bois d'œuvre canadien influe sur les prix, l'offre, la demande et le flux des échanges commerciaux, non seulement des États‐Unis et du Canada, mais aussi d'autres pays. Bien que la restriction commerciale des États‐Unis vise à limiter les importations canadiennes et à protéger les producteurs américains, les États‐Unis ne peuvent atteindre totalement cet objectif puisque d'autres exportateurs comblent le vide causé par la diminution des importations canadiennes. Les producteurs canadiens perdent à cause de cette politique américaine, mais cette perte est atténuée par le fait que le Canada redirige ses exportations vers d'autres pays. Les pays importateurs, tels que le Japon et l'Union européenne, tirent profit des restrictions commerciales des États‐Unis puisque le Canada cherche à leur vendre son bois d'œuvre.

Suggested Citation

  • Stephen Devadoss & Angel H. Aguiar & Steven R. Shook & Jim Araji, 2005. "A Spatial Equilibrium Analysis of U.S.–Canadian Disputes on the World Softwood Lumber Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2‐3), pages 177-192, June.
  • Handle: RePEc:bla:canjag:v:53:y:2005:i:2-3:p:177-192
    DOI: 10.1111/j.1744-7976.2005.04024.x
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    Cited by:

    1. Antoine BOUËT & Guillaume GRUERE & Laetitia LEROY, 2010. "The Price and Trade Effects of Strict Information Requirements for Genetically Modified Commodities under the Cartagena Protocol on Biosafety," Working Papers 2010-2011_11, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
    2. Okumu, Luke & Nyankori, James Cyprian Okuk, 2010. "Non-tariff barriers in EAC customs union: implications for trade between Uganda and other EAC countries," Research Series 113621, Economic Policy Research Centre (EPRC).
    3. Johnston, Craig M.T. & Parajuli, Rajan, 2017. "What's next in the U.S.-Canada softwood lumber dispute? An economic analysis of restrictive trade policy measures," Forest Policy and Economics, Elsevier, vol. 85(P1), pages 135-146.
    4. Parajuli, Rajan & Zhang, Daowei & Kosman, Keta, 2018. "Province specific impacts of the 2006 United States-Canada Softwood Lumber Agreement: A seemingly unrelated regression approach," Forest Policy and Economics, Elsevier, vol. 90(C), pages 1-6.
    5. Hmaed Najafi Alamdarlo & Fariba Riyahi & Mohamad Hasan Vakilpoor, 2019. "Wheat Self-Sufficiency, Water Restriction and Virtual Water Trade in Iran," Networks and Spatial Economics, Springer, vol. 19(2), pages 503-520, June.
    6. Zhang, Daowei & Nguyen, Ly, 2018. "Tariff and U.S. Paper Products Trade," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266771, Southern Agricultural Economics Association.
    7. Yakubu Abdul-Salam, 2019. "Evaluating the Impact of Brexit on Natural Gas Trade between the UK and the EU – A Spatial Equilibrium Analysis," CEERP Working Paper Series 008, Centre for Energy Economics Research and Policy, Heriot-Watt University.
    8. Wang, Shuo & An, Henry, 2019. "Technical change and productivity growth in the Alberta logging industry," Forest Policy and Economics, Elsevier, vol. 102(C), pages 130-137.
    9. Karugia, Joseph Thuo & Wanjiku, Julliet & Gbegbelegbe, Sika & Nzuma, Jonathan M. & Massawe, Stella & Macharia, Eric & Freeman, H. Ade & Waithaka, Michael M. & Kaitibie, Simeon & Gulan, Ayele, 2009. "The impact of non-tariff barriers on maize and beef trade in East Africa," 2009 Conference, August 16-22, 2009, Beijing, China 51672, International Association of Agricultural Economists.
    10. Vorotnikova, Ekaterina & Devadoss, Stephen, 2016. "The Effects of Panama Canal Expansion on US Dairy Trade Flows: West, East, and Gulf District Regions," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-20, August.
    11. Parajuli, Rajan & Sarangi, Sudipta & Chang, Sun Joseph & Hill, R. Carter, 2016. "The United States-Canada softwood lumber trade: An actual versus optimal export tax," Forest Policy and Economics, Elsevier, vol. 73(C), pages 112-119.
    12. Devadoss, Stephen, 2006. "Is There an End to U.S.-Canadian Softwood Lumber Disputes?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(1), pages 1-17, April.

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